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AudibleA sensational newspaper article alleging bad deeds by Florida insurance companies is prompting the Florida House of Representatives to look into the relationship between companies and their Managing General Agents (MGAs) and affiliated companies. The Tampa Bay Times reported the companies diverted billions of dollars to affiliates while claiming to lose money from hurricanes, based on the newspaper’s reading of a regulator’s draft report.
Former Florida Deputy Insurance Commissioner Lisa Miller reveals the inadequacies of the article and its misleading and incomplete portrayal of the market and regulation. She’s joined by a veteran Florida insurance agent who explains how MGAs and affiliates function, the financial dynamics of the insurance market, and the consumer safeguards built into the system.
Allen McGinniss, Principal, McGinniss Himmel Insurance Agency
Show Notes
Allen McGinniss is a licensed Florida insurance agent and the principal of the McGinniss Himmel Insurance Agency, based in Tallahassee, Florida. He began his insurance career 20 years ago as a State Farm agent before transitioning to an independent agent and co-founding his agency in 2015. He explained what Managing General Agents (MGAs) are and the crucial role in the insurance industry by performing essential administrative tasks for insurance companies.
These tasks include:
- Underwriting: Assessing and evaluating risks to determine appropriate coverage and premiums.
- Claims Management: Handling the process of claims from filing to settlement.
- Policy Issuance: Managing the issuance and renewal of insurance policies.
Why Are MGAs Important?
MGAs help streamline operations by providing specialized knowledge and services that insurance companies may not handle internally. McGinniss said they can either operate within an insurance company or function independently. This flexibility allows insurance companies to:
- Respond Quickly to Market Changes: MGAs enable companies to adapt to evolving market conditions efficiently.
- Manage Claims Effectively: By leveraging the expertise of MGAs, insurance companies can ensure that claims are processed promptly and fairly.
The Tampa Bay Times Article
The Tampa Bay Times published an article on February 22, 2025 titled Florida insurance companies steered money to investors while claiming losses, study says. Its reporting was based on a draft of a 2022 consultant’s study for the Florida Office of Insurance Regulation (OIR) for the time period of 2017-2019. According to the article, “While Florida insurers claimed to be losing money in the wake of hurricanes Irma and Michael, their parent companies and affiliates were making billions of dollars.” It reported that the previously unreleased study’s summary “reveals that as the industry was ailing and companies were losing money, executives distributed $680 million in dividends to shareholders while diverting billions more to affiliate companies,” which included MGAs.
McGinniss argued that the article fails to provide context regarding the operational costs and challenges faced by insurance companies.
“Yeah, the MGAs did make billions of dollars over that period of time because the Florida insurance market is a $20 billion premium market every single year,” McGinniss pointed out. “Insurance companies typically spend 30%, 35% of the premiums on administration. They’ve got to mail out forms, they’ve got to comply with regulation. They’ve got to underwrite policies, they’ve got to inspect them, they’ve got to pay claims. All that stuff is very expensive. And so, yeah, if you spend 35% of $20 billion it sounds a lot like $7 billion a year on expenses,” he said.
Host Miller and McGinniss discussed the substantial operational costs in running an insurance company that are necessary to manage claims responsibly to ensure they can continue to serve their clients. Miller, a consultant that represents insurance companies writing about 25% of the property insurance policies in Florida, stressed that the affiliate structure is not corporate greed as portrayed in the article, but a model of efficiency that companies use to operate. As a former deputy insurance commissioner, she noted that OIR closely monitors affiliated party transactions and prevents unlawful or excessive asset distributions.
“This Insurance Commissioner Mike Yaworski can ask an insurance company anything, anytime, anywhere, and has unfettered access to all of their financial reports. And for anyone to insinuate otherwise is wrong,” said Miller
The Legislature’s Response
Miller and McGinniss also discussed the Florida Legislature’s response to the Times article. Senate President Ben Albritton told members “We’ll hold insurance companies accountable for the rates they charge and the services they provide when disaster strikes. They aren’t going to manipulate the system and neither is any other industry. Not on my watch.” House Speaker Daniel Perez told his chamber that the OIR study “may suggest some insurance companies were using accounting tricks to hide substantial profits while telling us they were in a crisis.” Perez tasked the House Insurance & Banking Subcommittee to conduct hearings on the matter.
“I understand why they have to say what they have to say, because people are frustrated because they’ve heard one side of a story and they think they’ve gotten it all,” said McGinniss. He praised Governor DeSantis’ reaction to the legislative leaders’ statements, in which DeSantis defended past insurance reforms from 2022-2023, particularly litigation limits. “Our markets were being driven into the ground because of excessive litigation,” DeSantis said, noting that Florida had 78% of all U.S. litigation costs with just 8% of claims.
The Times story was published a week before the legislative session, which includes several bills fronted by the trial bar that would reverse key insurance reforms, including repealing the previous elimination of one-way attorney fees for plaintiffs in property insurance lawsuits. Repealing those reforms “could destabilize the industry,” McGinniss said.
Misconceptions About Profitability
McGinniss also addressed the broader misconception that all insurance companies are profiting at the expense of policyholders. He emphasized that the vast majority of insurance companies are committed to serving their clients and managing risks responsibly. Profitability is essential for:
- Sustainability: Insurance companies need to generate profits to remain operational and provide quality service, especially in Florida’s high-risk, catastrophe-prone environment.
- Market Stability: Profitable companies can invest in better claims handling and customer service.
Encouraging Informed Discussions
Throughout the episode, host Miller and McGinniss stressed the importance of a balanced understanding of the insurance industry. Florida is a complex market due to its increased hurricane risk and regulatory requirements. McGinniss emphasized that while there may be bad actors in any industry, the majority of insurance professionals are dedicated to helping clients and ensuring that claims are handled fairly and efficiently. By considering these insights, stakeholders can better navigate the complexities of the Florida insurance market and contribute to a more stable and competitive environment.
“Good data begets good policy,” said host Miller. “Public policy is always better with the right data. The Office of Insurance Regulation’s consultant report recommended that insurance companies and their MGAs and affiliates update their forms and their data provisions because some of these agreements were old and they needed to keep up with the times, and that’s exactly what the Office of Insurance Regulation has been doing for the past several years. It didn’t just sit on this report, as these articles have insinuated, and critics are accusing them of doing. In fact, just the opposite,” Miller said.
Key Takeaways
- MGAs are essential for efficient operations in the insurance industry.
- Media reports can create misconceptions; it’s important to understand the full context.
- Profitability is necessary for the sustainability and stability of insurance companies.
- Legislative changes can significantly impact the insurance market.
- Balanced perspectives and informed discussions are crucial for improving the industry.
Links and Resources Mentioned in this Episode
Florida insurance companies steered money to investors while claiming losses, study says (Tampa Bay Times, February 22, 2025)
Allen McGinniss: The truth about Florida’s insurance market — an agent’s perspective (Florida Politics February 28, 2025)
Florida’s insurance reforms are working, let them take effect. (by former Florida Insurance Commissioner Kevin McCarty in Florida Politics, March 3, 2025
The Managing General Agent (International Risk Management Institute)
Florida Home Insurers Blamed Storm Losses for Rapid Rate Hikes as Parent Companies and Affiliates Made Billions (Realtors.com, March 5, 2025)
Commissioner Mike Yaworsky Highlights a Year of Improvement in Florida’s Insurance Industry (Florida Office of Insurance Regulation, January 8, 2025)
Property Insurance Stability Report (Florida Office of Insurance Regulation, July 2022)
What’s Going on in the Homeowners Insurance World? (McGinniss Himmel Insurance Agency, September 29, 2022)
Assignment of Benefits & Insurance Litigation Reforms (Lisa Miller & Associates)
Florida Property Insurance Market Stats, Data and Facts (Florida Office of Insurance Regulation)
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** The Listener Call-In Line for your recorded questions and comments to air in future episodes is 850-388-8002 or you may send email to LisaMiller@LisaMillerAssociates.com **
The Florida Insurance Roundup from Lisa Miller & Associates, brings you the latest developments in Property & Casualty, Healthcare, Workers’ Compensation, and Surplus Lines insurance from around the Sunshine State. Based in the state capital of Tallahassee, Lisa Miller & Associates provides its clients with focused, intelligent, and cost conscious solutions to their business development, government consulting, and public relations needs. On the web at www.LisaMillerAssociates.com or call 850-222-1041. Your questions, comments, and suggestions are welcome! Date of Recording 3/5/2025. Email via info@LisaMillerAssociates.com Composer: www.TeleDirections.com © Copyright 2017-2025 Lisa Miller & Associates, All Rights Reserved
